Equating R&D With Innovation May Understate Actual Spending - Innovate Forum An interesting set of stats from the Confederation of British Industry based on a survey of 750 UK companies in this report.

The major thrust of the report is that R&D spending as a whole is a misleading indicator of the real amount of money companies are really spending on "innovation activities" - 2% vs 12%. Suggesting that the western world is ever more looking away from the recent trend on relying on technology to provide new improvements in the marketplace - only 20% of companies agreed that all innovation is dependent on technology developments. The major force instead seems to be the Service industries - which currently accounts for 70% of the UK economy. Interesting stuff.

I was talking to a recent Imaginatik client just yesterday who was telling me about a revelation that he had. When he told his colleagues that he was looking at getting Idea Management software, it elicited the response: "Idea Management - what do we need that for?". After thinking for a bit he said - "You guys already have an Idea Management system....it just SUCKS."

After wiping the tears of laughter from my eyes, I realized that, to an extent, he was absolutely right. All companies already manage their ideas in some format - just in most cases this system is horribly inefficient and erratic. Formalizing and enabling this process using software is really about making a process most companies still take for granted, and enabling it to produce regular (and valuable) results that drive future business profitability. Six Sigma that!

I can see the next ad campaign now....

So I am sitting here at the Forrester Exeutive Strategy Forum 2005 in Boston - and was half listening to "Ginny" Rometty, an SVP of IBM Global Services - when something she said finally grabbed my attention. As you can guess - it had to do with innovation - and she was talking about a recent string of mini-conferences IBM had been holding. During these meetings, it emerged that 50% of business executives ranked Innovation as the no.1 most important business capability to growing their businesses. No real surprise there, except that the next thing she mentioned was that she'd identified 3 (yes, only 3) different ways in which you could innovate - Product Innovation, Process Innovation, and Business Model Innovation.

Those of you who have read my comments in the past will know that Imaginatik has done work in the past that has identified more than 20 different ways in which you can innovate (btw - apologies for those of you who requested that paper via the research@ e-mail, turns out the paper wasn't publicly publishable in the format we had, and I simply haven't had the time to sanitise it to be able to send it out to you!). However, it got me thinking about that paper - something I brought up whilst chairing the innovateEurope 2005 conference in London recently (which was fantastically succesful by the way - outstanding speakers, some real deep insights from some of the world's leading innovators - the conference notes and video will be available soon, and I'd strongly reccomend that those of you who were unable to attend to purchase it from the conference website (http://www.innovateeurope.com) - and pay special attention to Art Fry, Ray Buschman, Dean Bellefleur, Mauro Pennella, Ciaran McArdle - hell all of them! Just a lot of great content there!) .

During one of my mid-session blurbs (I always like to give people some discussion topics during breaks - for discussion upon the return, I thought I'd challenge people to come up with as many different types of innovation as possible. Figuring that a group of lead innovators would come up with some interesting answers, I was shocked then with the very first answer I got from the audience upon their return.

"2,192" replied Howard Smith of CSC

"2,192? Pretty exact number....why did you come up with that number?" (seeing as he wasn't carrying a sheet of paper as long as a toilet roll, I was assuming that he hadn't written them all up and counted them up...

"Because that's roughly the number of discrete business processes and functions that are used by the average business" he replied.

BINGO! The real answer is that there is no part of the modern enterprise that shouldn't be trying to innovate, to change, to improve in order to achieve some level of competitive advantage as you never know where the next real advantage is going to come from. Look at the most successful companies in the world - very few of them are still doing what they started off doing. Nokia started off in Forestry products are rubber boots - now in Telecoms. IBM started off making computers - now mostly business services. New products and new business models are just the tip of the iceberg - what about marketing innovation, launch innovation, knowledge innovation, resource innovation - and the myriad of other places that competitive advantage can come from? Innovate globally folks!

Apologies.... - I have to apologize to all the Corporate Innovation readers for being so lax in keeping this blog up to date - the sheer amount of travel that I've been subjected to recently has prevented me from writing as often as I'd like to - but rest assured I'm back on the case - so stay tuned because a lot of new stuff is in the pipeline!

Gary Hamel's Idea Hatchery Ah, you gotta love journalists and their flair for trying to make old hat seem new. This time, it's BusinessWeek and well known author and consultant Gary Hamel, who has decided to start a "Management Innovation Lab" at the London Business School where he resides part time. Sounds cool doesn't it? Unfortunately the "lab" is a thinly masked way for Gary to get some publicity for his latest consulting offering - a two day workshop which essentially is there to get business leaders from Ground Zero, to the first steps towards creating a cohesive innovation strategy for that firm (Essentially the "Framing" stage of the Innovation Pipeline).

Not that I blame him for trying to make "a buck" as they say here in the US. In fact, he does actually make an interesting distinction for what he calls "A hierarchy of innovation":

'Economic progress is driven by three forms of innovation: institutional innovation, which includes the legal and institutional framework for business; technological innovation, which creates the possibility of new products, services, and production methods; and management innovation, which changes the way organizations are structured and administered. Management innovation has produced the most profound shifts [in business productivity].'

The article's not worth reading - but I'll be keenly watching to see if he writes more on the innovation hierarchy in the future.

Innovation Most Critical Factor to Success, Say U.S. Business Leaders; Cisco Innovation 2005 Study Although I have no idea as to why a company like Cisco is actually conducting this kind of study on Innovation (must be a marketing angle in there somewhere...I'm such a skeptic!), there were a couple of interesting stats coming out of this - for example:

"-- Innovation is clearly the most important factor in business success, according to business and technology leaders. Fifty-three percent cited it as having the biggest impact on competitiveness, while increasing employee education and skill levels was favored by 26 percent. Reducing wages (14 percent) and cutting corporate taxes (7 percent) were not seen as strong drivers of competitiveness.

-- Given the focus on innovation, it is not surprising that many business and technology leaders are seeking improvements in the education system. In particular, a solid majority cited a need for greater creative thinking and problem solving skills (58 percent) from students. A third of those polled called for stricter student requirements to accomplish this goal. Twenty-one percent proposed improved communications among teachers, parents and students while the same amount advocated broader access to global subject matter."

Interesting - not really worth reading in full though.